SIMULATIONSX

XPERIENTIAL NATURE OF OUR SIMULATIONS ENABLE THE DELEGATES TO LEARN BY DOING!



INVENTORY MANAGEMENT

Inventory record accuracy would be decreased by

 ABC analysis.
 increasing stockroom accessibility.
 reorder points.
 cycle counting.

With the quantity-discount model, an order level might not be at a minimum point of a total cost curve.

 False
 True

The goal of ABC analysis is to

 determine the profitability of items.
 estimate dollar value per pound.
 to identify the A items for better inventory control.
 estimate average volume per dollar value.

For a company that manufactures most of its products as standards, more inventory should be placed

 close to suppliers.
 equally distributed between the plants and warehouses.
 within the plant as work-in-process.
 closer to the customer.

Monitoring the temperature of tomatoes during shipment would best be done using:

 GPS
 Bar codes.
 ROP
 RFID tags
 Universal Product Codes (UPC)

In a two-bin inventory system, the amount contained in the second bin is equal to the:

 ROP
 optimum stocking level
 amount in the first bin
 safety stock
 EOQ

Which of the following is NOT a type of inventory?

 raw material
 MRP
 finished goods
 work-in-process

Reorder point models are primarily used for independent demand items.

 True
 False

The difference(s) between the basic EOQ model and the production order quantity model is (are) that

 A. the EOQ model does not require the assumption of known, constant lead time.
 there are no holding costs in the production order quantity model.
 the production order quantity model does not require the assumption of known, constant demand.
 the production order quantity model does not require the assumption of instantaneous delivery.

Space considerations are not included in any of the economic ordering models.

 False
 True

If the production rate in an economic production lot size model is very much larger than the consumption rate, the results are practically the same for economic production lot size and EOQ.

 True
 False

Which one of the following statements concerning the economic order quantity (EOQ) model is TRUE?

 Quantity discounts can occur and taken into account in the total cost calculations.
 Partial receipts are allowed.
 Uncertainty in leadtime may not exist.
 Annual holding cost, annual purchasing cost and annual delivery costs are the relevant costs in the

A system that triggers ordering on a uniform time basis is called a

 EOQ.
 fixed-quantity system.
 reorder point system.
 fixed-period system.

In the basic fixed-order quantity model, if annual demand doubles, the effect on the Optimal Order Quantity (EOQ) is:

 it doubles
 decreases by a factor of 2
 it is about 70% of its previous amount
 it is half its previous amount
 it increases by about 40%

A firm producing medical equipment to customer specifications is most likely using a

 make-to-order strategy.
 make-to-stock strategy.
 assemble-to-order strategy.
 mass production strategy.

Which one of the following statements is best?

 A fixed interval system requires more administrative control and computer support than does a ROP sy
 A fixed interval system requires more safety stock than a ROP system.
 A fixed interval system lends itself more to quantity discounts than does a ROP system.
 In a fixed interval system, the value of Q is kept the same from one cycle to another.

Policies based on ABC analysis might include investing

 more in inventory security for C items.
 more in supplier development for A items.
 extra care in forecasting for C items.
 the most time and effort verifying the accuracy of records for B items.

ABC analysis divides an organizations on-hand inventory into three classes based upon

 annual dollar volume.
 the number of units on hand.
 annual demand.
 unit price.

The Basic EOQ model ignores:

 Purchasing costs
 A items
 Ordering costs
 B and C items
 Holding costs

The two most important inventory-based questions answered by the typical inventory model are

 when to place an order and what is the cost of the order.
 how many of an item to order and with whom the order should be placed.
 when to place an order and how many of an item to order.
 how many of an item to order and what is the cost of this order.

In the basic Q model, if the lead time doubles, the EOQ will:

 none of the above
 increase, but not double
 double
 remain the same
 decrease by half

Fixed-order quantity models are:

 Fixed for a specified time period
 Event triggered
 Time triggered
 Made up of a variable order size

One use of inventory is

 to provide a hedge against inflation.
 to ensure that item cost is maximized.
 to tightly link production and distribution processes.
 to tightly link a firm s production with its customer s demand.

Extra units that are held in inventory to reduce stockouts are called

 demand variance.
 reorder point.
 safety stock.
 just-in-time inventory.

If both the lead time and daily demand are constant (no variation), the ROP is equal to:

 Daily demand times lead time.
 Expected demand minus safety stock.
 Safety stock
 Expected demand plus safety stock.

What items do students typically buy on an ROP basis?

 bran muffins
 wedding gifts
 gasoline for car
 computer software
 textbooks

Which of the following inventory systems would be most appropriate in controlling many items ordered from the same vendor?

 Fixed Time Period System
 Materials Requirements Planning System
 Fixed Order Quantity System
 One Period Inventory Model Using Marginal Analysis

Most inventory models are made based on:

 Cost minimization
 Minimizing setup times
 Minimizing lead time
 Optimum influence on demand
 Profit maximization